Exam 5: Price Elasticity of Demand and Supply

You are part of a local community theater group. It is the goal of the group to increase the amount of revenue earned through ticket sales. Mary says the obvious solution is to increase ticket prices. Is Mary correct?

Since it is always a negative number, economists use the convention of taking the absolute value of:

Which of the following comparisons is  true  regarding price elasticity of demand?

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

Price elasticity of demand measures:

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point B on the demand curve equals:

What happens to total revenue if price increases and demand is inelastic? Why?

If a straight-line demand curve slopes down, price elasticity will:

If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:

Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital's revenues are bigger than Joshua's revenues. This is because:

Which of the following goods is likely to have the most elastic demand curve?

Good A has a price elasticity of demand of .27, while good B has a price elasticity of demand of 2.9. To raise the most tax revenue, the government should:

When a 2 percent increase in price generates a greater than 2 percent decrease in quantity demanded, then:

Suppose the price elasticity of demand for Good A is 2.4 and the price elasticity of demand for Good B is 1.2. Which of the following statements is consistent with these values?

An increase in total revenue results from which of the following?

The price elasticity of demand for a vertical demand curve is:

If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of demand is:

Using supply and demand analysis, which of the following is true ?

The more inelastic the demand for a product, the more the actual burden of a tax on the product will:

If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is: